Global semiconductor sales and capital expenditures demonstrated mixed trends, with some segments thriving while others faced potential challenges.
Sector Performance Analysis:
Despite the introduction of new tariffs, electronics and integrated circuit (IC) sales in Q1 2025 remained aligned with traditional seasonal patterns. Electronics sales dropped by 16 percent quarter-over-quarter (QoQ), remaining flat year-over-year (YoY).
IC sales, however, showcased robust growth, increasing by 23 percent YoY despite a 2 percent QoQ decline. This rise underscores the continued demand for AI-driven high-performance computing infrastructure, a segment largely insulated from the immediate impacts of tariffs, according to the Q1 2025 semiconductor manufacturing monitor (SMM) report released by SEMI in collaboration with TechInsights.
“While the first quarter of 2025 did not see a direct impact from new tariffs on electronics and IC sales, the uncertainty around global trade policies is prompting some companies to accelerate shipments and others to pause investments,” noted Clark Tseng, Senior Director of Market Intelligence at SEMI. This mixed response suggests that the industry may witness atypical seasonality in subsequent quarters, driven by divergent corporate strategies in response to geopolitical risks.
Capital Expenditures and Equipment Spending:
Semiconductor capital expenditures (Capex) fell by 7 percent QoQ in Q1 2025 but surged by 27 percent YoY. Notably, Capex in memory-related segments increased by 57 percent YoY, reflecting intensified investment in advanced packaging and AI-centric memory solutions. Non-memory CapEx also grew by 15 percent YoY, signaling broader industry efforts to innovate and bolster infrastructure resilience amid supply chain uncertainties.
Wafer fab equipment (WFE) spending grew by 19 percent YoY in Q1 2025 and is projected to rise another 12 percent in Q2. This growth is fueled by investments in advanced logic and memory production to meet the escalating demand for AI semiconductors. Similarly, test equipment billings surged by 56 percent YoY in Q1 and are expected to rise by 53 percent in Q2, indicating increased demand for rigorous chip testing as manufacturers prioritize AI and high-bandwidth memory (HBM) chips.
Boris Metodiev, Director of Market Analysis at TechInsights, emphasized the sector’s resilience: “The WFE market is poised for steady growth driven by government investments and semiconductor advancements, particularly in AI and emerging technologies. However, geopolitical uncertainties, including export restrictions and potential tariffs, pose significant risks that could impact this positive trajectory.”
Regional Capacity Expansion:
Installed wafer fab capacity reached 42.5 million wafers per quarter (in 300mm equivalents) in Q1 2025, reflecting a 2 percent QoQ and 7 percent YoY increase. China continues to lead in capacity expansion, though its growth rate is expected to moderate in the coming quarters. Japan and Taiwan, on the other hand, are experiencing strong quarterly capacity gains due to substantial investments in power semiconductor manufacturing and leading-edge foundry expansions.
Outlook for 2025:
Looking forward, SEMI and TechInsights anticipate that the semiconductor industry will face atypical seasonal patterns driven by geopolitical uncertainties and evolving supply chain dynamics. AI and data center technologies are expected to remain bright spots, attracting continued investment and demand. However, other segments may see delayed investments or shifts in demand as companies reassess their strategies in response to the evolving tariff being announced by United States President Donald Trump.
TelecomLead.com News Desk
